The International Monetary Fund (IMF) has issued a pressing call for Nigeria to eliminate costly fuel and electricity subsidies to tackle its economic woes effectively. These subsidies, criticized for inefficiency and ineffectiveness in aiding the intended recipients, are exacerbating Nigeria’s fiscal difficulties and impeding poverty and food insecurity alleviation efforts.
In its recent report titled ‘IMF Executive Board Concludes Post Financing Assessment with Nigeria,’ the IMF stressed the urgency of phasing out subsidies to redirect resources towards more targeted social welfare programs.
With Nigeria facing a crippling cost-of-living crisis, the IMF advocates for temporary and targeted social transfers to assist the most vulnerable segments of the population.
While Nigeria removed petrol subsidies in May 2023 to address fiscal challenges, it has further strained living standards, with Nigerians’ disposable income dwindling amid inflationary pressures. The IMF highlighted Nigeria’s stagnant per-capita growth and rising poverty levels, underscoring the nation’s economic hurdles.
Amid global economic uncertainties and domestic challenges, Nigeria grapples with a severe cost-of-living crisis compounded by low reserves and limited fiscal space.
The IMF emphasized the necessity for revenue mobilization and digitalization to improve public service delivery and ensure fiscal sustainability.
The projected reduction in Nigeria’s overall deficit for 2024 is deemed critical in addressing debt vulnerabilities and reducing reliance on financing from the Central Bank of Nigeria (CBN), according to the IMF.
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